Eamon Ryan (Dublin South, Green Party)

This debate allows us to address a crucial issue in a time of real change in our country. We must get three things right. We must get our finances in order, both in terms of our own budget and in terms of getting saner and sustainable lending going again; we must get real public sector reform; and we must then start to plot a path to economic recovery to allow us generate the wealth that pays for the social services we all want to see happen.

In regard to the budget and getting our finances right, the Government was faced with a difficult task. The reduction in public finances in terms of the tax income is massive and has been very swift in the change that has occurred. On the response by the Government, the broad parameters in terms of trying to make up some of the €6 billion gap that we had not expected but that had evolved and had to be dealt with was to see approximately €2 billion in tax revenues raised, mainly in five areas which target the better off. Those are capital gains tax rises, tax on second homes, tax on the higher VAT rate, which does not affect food, clothing, heating and other essential provisions, and a number of other taxes.

A total of €2 billion will be raised in cuts in spending, and €2 billion in increased borrowing, adding to our borrowing requirement. There is clear recognition that the increased borrowing means we are looking at a two or three year path out of the economic crisis we are in. Next year the recommended borrowing requirement will double. We can do that because our overall level of borrowing nationally compared to other countries is low but there is still a very difficult two to three year task that we must set out, and we should be honest with the people as to the nature of that.

When it came to the cuts, it was decided in Government that every Department would play its part but that there would not be cutbacks in real expenditure in education, health and social welfare, despite the fact that approximately 80% of Government spending is accounted for in those three large social areas. In education there is an increase in expenditure of €300 million rather than a real cut. However, the reality is that the wage bill and the increasing number of students coming into the system required the Minister for Education and Science and the Government to collectively agree a series of measures which would allow him operate within that budget. That presents a real difficulty and a challenge but it is something we could not avoid within the context of the overall budgetary arithmetic.

My second point relates to public service reform, which is crucial to the debate. It would be wrong for us not to recognise that in the education sector, as in every other sector of the public service, there is scope for reform. We cannot continue to operate as we have for the past ten years, particularly in light of the changes that have occurred globally. There has been a budgetary increase and if we were to bring about reform in the education sector and achieve efficiencies of 2% or 3% in the context of how things are done, it would give us the resources to provide the services everyone wants to be delivered. The issue of reform goes hand in hand with that relating to budgetary matters.

Like the Minister for Education and Science, Deputy Batt O'Keeffe, I look forward to negotiating with the partners in order to discover the means at our disposal to try to achieve efficiencies. There are simple examples that can be provided which do not help the teachers in their cause. First, there is the inflexibility that exists in the context of an inability to move from one school to another without one's rights being lost. Second, there is also an inability to move staff from a school where there is an excess of teachers to one where there is shortage. In this moment of real crisis and change, we must alter the way we operate. We must be innovative and efficient in education and every other sector of society. That is the crucial task we face in the context of delivering the services required.

My third point relates to economic recovery and how this might be achieved. An interesting article appeared in one of the newspapers this morning suggesting that what happened in Finland, which underwent a shock similar to that being experienced by Ireland in the early 1990s, is an example of how to proceed. Finland experienced a 6% drop in GDP in 1992 and a 4% drop the following year. The shift was dramatic and came about as a result of changes that had occurred in the Russian Federation.

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